FRL 301 FINAL FORMULAS Flashcards
1
Q
Top-Down Approach for Operating Cash Flows (OCF) = ?
A
Sales - Costs - Taxes
2
Q
Book Value = ?
A
Cost (1 - Tax Rate + … )
3
Q
Aftertax salvage value = ?
A
Fixed assets * % Sold * (1 - Tax Rate)
4
Q
NWC Requirement = ?
A
- Increase in Inventory + Increase in Debt - Increase in A/R
5
Q
NWC Recovery = ?
A
Increase in Inventory - Increase in Debt + Increase in A/R
6
Q
What is the overall market real rate of return?
A
1.0
7
Q
U.S. Treasury Bills Beta = ?
A
0
8
Q
Vu (Value of Unlevered Firm) = ?
A
EBIT * (1 - Tax Rate)/Unlevered Cost of Capital
9
Q
Ve (Levered Value of equity) = ?
A
VL (Value of levered firm) - D (Debt)
10
Q
Annual Interest Tax Shield = ?
A
Value of Bond Issues Outstanding * Coupon Rate * Tax Rate
11
Q
Firm value = ?
A
Shares Outstanding * (Borrowed Amount/Repurchased Shares)
12
Q
NPV = ?
A
- Fixed Assets + Operating Cash Flows (OCF) * [(1 - (1/(1+rate of return)^t))/real rate of return] + Net Working Capital (NWC)/(1 + rate of return)^t
